Strategic Decision Making (Essay Sample)

Strategic
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Institution
Strategic
Introduction
Strategic decision making is a fundamental skill that is essential for any successful executive. The decisions that are made at strategic level are often challenging and therefore require a lot of resources to be pulled together. Organizations often consider keenly the immediate surroundings; the political system influences how decisions will be made in the organization. Strategic decision making lies primarily on the strategy making. Typically the strategic decision making are put in place to increase the focus towards expanding the organization relevance.
Purpose
The essay will discuss critically and analyze the statement of the essay pointing out various situations and relating them with the book ‘Fool's Gold.' Additionally, the strategic decisions, how the strategies are made and the things that bring out sound decisions based on the strategies.
Content and analysis
According to the book, ‘Fool's Gold,' Tett (2010) illustrates the situation in which the concerned organization faced. The strategic decisions taken by JP Morgan points at the economic, financial crisis that resulted from the decision to take invented credit deviates which, were meant to be beneficial to the banks and the economy at large. Political system influences the decisions of the firm, Based on the book by Tett; it is apparent that the economic failure of the banks resulted from the poor use of instruments in mapping out the efficiency of the banks (Tett, 2010). Arguably, the manipulation received from outside; especially competing firms took risks that led to a near collapse of the financial system. Similarly, it is vital to note that bonding of ideas and resources brought a new kind of financial alchemy which ignited a revolution in the banking sector and showed how the revolution fell out of control.
It is further vital to argue that strategic decision making is an all involving activity. For an organization to have a smooth undertaking of its tasks, the team leaders and supervisors show a keen observation of strategic technics in addressing the concerns of the organization. Decision-making process, therefore, is at the heart of the functions of the organization. The book analysis point out that JP Morgan knew that the credit worthiness of Exxon but the bank denied the bank the credit (Tett, 2010). Critically, the deeper perspective of the action shows that JP Morgan bank looked beyond the creditability of the Exxon. Exxon would need to have a large capital reserve which would generate little profit. Therefore, they were denied the loan. The competitive advantage enjoyed by JPM shows that the bank profitability exceeded that of the average profits of all other firms. In order to sustain the market dominance required the intervention of adopting working strategies is essential (Cyert & Williams, 1993). For example, the introduction of pivotal innovation dubbed ‘Bistro' (Broad Index Secured Trust Offering). Arguably, the paradigm concerns various assumptions taken and the controversies which are no longer controversial, but rather instrumental.
The realistic view of the strategic decision making and decision making itself involves a normative implication especially desired by the profit-seeking companies. According to the literature concerning decision making, Eisenhardt & Zbaracki (1992) argues that strategic decision making shows the commitment of the resources or precedents set that will help in the zoning the infrequent decisions made. The synthesis of the theory point at the empirical support on the concurring debates.
It is clear that the progress in the organization is highlighted by the comprehension of the strategic decision making. People are rational; however, they are not focused. Additionally, it is vital to note that the political system and perspective gives a compelling description of strategic decision making. An opportune time to take the chance of making the organization goals realized. Based on the book by Tett, the structure of the investment vehicles highlights the strategic making scenario. Just as Bistro helped in making the business gain a tentative activity in transferring the credit to the outside parties, which totaled to $9.7 billion in which JP Morgan had made to all the 307 companies.
Decision making is all together crucial in making a strategic strategy work. The CDO (collateralized debt obligation) was an influential scheme. According to the financial perspectives, using the cost-benefit analysis tool, human beings depicted rationality and bounded rationality that influences the decisions on strategies.
The financial gizmos and Machinations presented in the book highlight the challenges in securing the sector since there is difficulty in making ideal strategies. JP Morgan was responsible for the change of credit default swap responsible for the marketization. Critically, the strategic implication depicts the essence of taking the lead in ensuring that the suggested and agreed strategies are put in place to ensure that smooth flow of the organization. As argued by Bourgeois (1988), it is paramount to make fast strategic decisions process especially at high-velocity environment. For example, in the book ‘Fool's Gold,' JPMorgan did their best in the innovation and avoidance of disasters, they were responsible and prudent like the bad apples which were at most of the other banks.
Complexity theorists Stacey (1995) have however argued that the performance of an organization is a collective form in which it is not based on the single decision, but the long-term outcome based on the entire history. Comprehensiveness measures the extent to which the alternatives are being sought. Similarly, crucial positive links between firm's performance and comprehensiveness are generated in a meta-analysis of the effective planning and strategy making process (Eisenhardt & Zbaracki, 1992). The decisions taken indicate the extent in which long term opportunities are generated to curb the threats in the environment. Relating to the book, the industry showed the mandate to deliver quality results but due to the poor strategy generation in making decisions it resulted in the fall of the economy. The financial issues were as a result of poor choice of strategies. Effective strategies that guide organizations concerns proper planning and discussion of ideas in order to come up with effective strategies that would guide in decision making process for the prosperity of the organization. Therefore, the success of the organization will be guided along the strategies set by its management and experts.
It is apparent, therefore, that the impact that sound strategies enacted will give a better result. As pointed in real life situation, many organizations fail to realize their ultimate goal. It is most contributed by the strategic management panel who fail to consider the tools that are instrumental in strategy setting. The book ‘Fool's Gold' shows the ‘Morgan mafia' had zeroed in an idea that would accept default swaps. JPM crew made the idea of interest rate swap work. The motivation behind the strategic decision made was the need to have goals of greater rents and attacking regulations rather than having a mere ‘market.'
The strategic modeling that took place after Chase Manhattan bought JPM in 2000 showed the modeling that was purposely meant for rebranding. Analytically, the new environment shows that the organization has undertaken changes concerning the strategic decisions. For example, the team members focus on the political leveraging in risk insurance in an aim to have a deregulatory lobbying. The robust framework in the analysis decisions remains the sole role of the management of the organization. The behavioral skills in support for strategic decisions and become alert on the systematic cognitive biases. Therefore, the need to have a clear set up of strategies.
The argument of several economists takes readers behind the sights to the central sanctums of exclusive finance. The JPM bank illustrates a detailed, inclusive venerability of an investment bank. Tett argues that elites in several societies tend to maintain power not merely by gathering wealth but by domination of ideologies as well as deciding on things to discuss, analyze and things to avoid (Tett, 2010). As described by James Meek, 2009 the social silence surrounding the explosion of derivatives and wealth influenced by banking cadre, targeted to reinforce and construct a new power configuration and encouraged financiers to perceive their ventures as detached from the rest of the society.
Tett continues to point out that, lack of holistic visualization of finance results to terrible consequences. The most disastrous of which have been the trap of families and individuals who had never heard of or embraced CDO (collateralized debt obligation) or an SIV (structured investment vehicle), but are currently suffering from the loss of savings. The book, ‘Fool's Gold' gives an in-depth description of how small group of bankers at JP Morgan designed the techniques that are pointed to be the source of exacerbating the financial crisis. Nevertheless, JP Morgan embraced strategic decision making in inventing credit derivatives which were meant to be advantageous to the economy especially to the banking system. Banking sector like any other sector is faced with challenges and competitions. Despite the fact that JP Morgan bank invented strategic tools to make banking more efficient, the tools were manipulated by other firms to almost cause collapse and undo risks of the financial system.
As a matter of fact strategic decision-making is at the central of strategy making with decisions being the key to proper strategy. It is argued that there are several factors stimulating the q...